(Ecofin Agency) - The world’s top steel producer and Chinese giant BaoWu is among the actors financing the development of Guinea's Simandou project, the world’s largest unexploited iron ore deposit. North of this deposit, Australia’s Arrow explores another project.

On October 21, Arrow Minerals, an Australian firm, announced a memorandum of understanding (MoU) with Baosteel, a subsidiary of Chinese giant BaoWu. The MOU provides a framework for potential iron ore sales from Arrow’s Simandou North project to Baosteel.

With this agreement, BaoWu seeks to consolidate its presence in Guinea's iron ore sector. Early this year, the Chinese group acquired a stake in two blocks of the Simandou deposit. Regarding the new deal, while it positions BaoWu to secure access to iron ore if exploitable resources are found at Arrow's project, it is subject to Arrow’s resource and reserve estimation, and completion of feasibility studies, among others.

According to Arrow’s Managing Director, David Flanagan, “Since commencing field activities at our Simandou North Iron Project in 2023, Arrow has completed 521 holes for a total 10,309 meters, culminating in Exploration Target Announcement and the intention to move to resource drilling and scoping studies in 2025.”

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Baosteel Resources and Arrow
Minerals sign #IronOre Development
MOU

The Non-Binding Memorandum of Understanding (MOU) provides a framework to negotiate binding agreements to deliver Arrow Minerals #IronOre to steel mill customers.. pic.twitter.com/Y8T7qgEq4B

— Maurice Salvador (@SalvadorMaurice) October 20, 2024

The partnership between Arrow and BaoWu highlights China's crucial role in the success of the Simandou project. Production from this deposit has faced delays but is now expected to begin by the end of 2025, supported by Chinese companies. Alongside Baowu, Chalco Iron Ore Holdings partners with Rio Tinto on other blocks of the Simandou deposit. China aims to secure access to production projected to exceed 100 million tonnes of iron ore annually.

Arrow estimates that the exploration target for the Simandou North project ranges from 281 to 716 million tonnes, with an iron content between 33% and 46%. If confirmed, the mine could utilize infrastructure developed for the Simandou project, including a 600 km railway to the Morebaya port in southwest Guinea. The total investment for this infrastructure is estimated at over $15 billion.

Emiliano Tossou